Van Dyck Law, LLC is a full service Estate Planning & Elder Law practice. They write about comprehensive planning in the areas of wills, trusts, powers of attorney, medical directives, Elder Law and probate & estate administration.

It’s not just about how much money you’ve saved for retirement, it’s how much you get to keep after taxes.

To optimize your savings, you need to build a tax-efficient portfolio. It should contain the following:

Tax-efficient investments. These are investments with the lowest taxes compared to their interest or dividend income;

Tax-efficient withdrawal strategies. Use differently taxed accounts that offer flexibility for income purposes; and

Tax-efficient planning. Get a long-term tax plan that focuses on lower taxes over your entire retirement, not a given year.

Don’t Pay Triple Taxes. Retirees who don’t plan effectively for distributions from IRAs or other qualified plan distributions, could easily pay three times their tax rate. You can avoid this by taking control over how much income you pay yourself. Your spending needs may be less, so you can keep that amount low by managing your income sources effectively to get the most tax efficiency over your lifetime.

Understand Your Tax Bracket. As a retiree, you need to stay within the 15% tax bracket for the rest of your life. Effective tax planning must begin in your first year of retirement. Don’t assume your tax plan is ideal if you don’t “fill” the entire 15% tax bracket in your early retirement years. The goal is to “fill” every retirement year with taxable income to the upper limit, even if you don’t need that income.

Retirees are converting qualified money (pre-tax dollars) into nonqualified money (savings on which taxes have been paid). This has been done at a very low tax rate, and the growth associated with these will no longer be taxed.